Connor Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attach case are $37, $8, and $12, respectively. The president is pleased with the following performance report:

	Actual Costs	Static Budget	Variance
Direct materials	$340,400	$377,400	$37,000 F
Direct manufacturing labor	80,000	81,600	1,600 F
Direct marketing (distribution) labor	113,900	122,400	8,500 F

Actual output was 9,000 attach cases. Assume all three direct-cost items above are variable costs.

Requirement

Is the president's pleasure justified? Prepare a revised performance report that uses a flexible budget and a static budget.

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Part 1

Prepare a revised performance report that uses a flexible budget and a static budget. Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable (F) or unfavorable (U). (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label.)

	Actual Results	Flexible-Budget Variance	U/F	Flexible Budget	Sales-Volume Budget	U/F	Static Budget
Output units
Direct materials
Direct manufacturing labor
Direct marketing labor
Total direct costs